The crisis in the UK dairy sector intensified today when First Milk announced plans to cut the price it pays farmers for their milk once more in January.
The dairy will reduce its standard litre liquid price by 1 pence to 21.7 pence a litre and its manufacturing price by 1.1 pence to 22.9 pence per litre.
This follows a 1.4 pence liquid and 1.8 pence manufacturing cut on the December milk price.
The Glasgow-headquartered firm, which is 100% owned by UK dairy farmers, produces brands such as the Lake District Dairy Company, Isle of Arran cheddar, Scottish Pride and Mull of Kintrye cheddar.
“Unfortunately market indicators for core dairy products have declined further since the start of November,” said First Milk chairman Sir Jim Paice, who previously served as Defra farm minister at the peak of the 2012 milk price crash.
“In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further.
“During the last few weeks, the Board and myself have met more than 650 producers and their families at large and small meetings around our milkfields. We have been encouraged and humbled by the determination of members that we all work together to get through this current trough.”
He said the co-op was working on a number of measures to help it manage future volatility and better align milk production and demand.
“We will make an announcement on this as soon as possible,” added Sir Jim.
Last month, dairy farmers supplying Arla were informed of a milk price cut, which took effect on Monday.
The European farmers’ co-operative blamed challenging markets for a 1.63 pence reduction to its standard litre price to 26.84 pence a litre.
On Monday, members from the UK’s farming unions gathered at NFU Scotland’s headquarters in Edinburgh to discuss the dairy crisis.
The unions, which included NFU England and Wales, NFU Cymru and the Ulster Farmers Union, agreed to work together to ensure any farmgate price cuts were proportionate and to encourage promotion of dairy products for the export market and to replace foreign imports.
NFU Scotland milk committee chairman Gary Mitchell said the unions would also address a growing gap between retail margins and farmgate prices.
“The lack of transparency in the liquid sector needs to be addressed, as does the seemingly slow response of retailers to wholesale and farmgate cuts,” said Mr Mitchell.
“While the retail price of cheese and butter on shop shelves has risen year on year, wholesale prices for these staple products have crashed by 30-40%.”